Multiple Choice
Erica wants to buy Marco’s used iPod. He is asking her to pay him \$100 for it. The \$100 represents the iPod’s:
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4. Merchandising Operations
Net Sales
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following best describes 'Net Sales' in financial accounting?
A
Total cash received from customers during the period
B
Total revenue from sales minus returns, allowances, and discounts
C
Total amount of new after-tax income generated from business operations
D
Total sales before any deductions or adjustments
Verified step by step guidance1
Understand the concept of 'Net Sales' in financial accounting. Net Sales refers to the total revenue generated from sales after deducting returns, allowances, and discounts.
Identify the components that affect Net Sales: (1) Total revenue from sales, (2) Returns, (3) Allowances, and (4) Discounts.
Recognize that Net Sales is calculated by subtracting the sum of returns, allowances, and discounts from the total revenue generated from sales.
Compare the given options to the definition of Net Sales. Eliminate options that do not align with the concept of Net Sales, such as 'Total cash received from customers' or 'Total sales before any deductions or adjustments.'
Select the option that matches the definition of Net Sales: 'Total revenue from sales minus returns, allowances, and discounts.'
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